Rumor: Gome to Abandon Coo8 ?

Gome’s founder and former CEO Huang Guangyu who is still doing his time in prison won’t be back in 3 years. Even though, in the business world this man never left. Rumor has it that unlike the previous “Double Brands” e-commerce strategy Gome had proposed, the company is about to give up one child, and apparently the “adopted one”, namely Coo8.

So how are the two children doing?

Currently the electronics retailer has two B2C services, operating with one supply chain and competg with each other. One is the Gome.com.cn, apparently the ‘biological’ kid, and the other one is the “adopted” Coo8.com (80% equity bought by Gome at RMB 48m, 2010).

Gome staff revealed that Huang has always emphasized the strategic position of these platforms, and actually “He only talks about Gome.com in internal meetings.”

Analyst Lu Zhenwang also revealed that Gome.com.cn has finished the syncing of the data of Gome’s user base, in which Coo8 is not even involved. This year, Gome kept on investing RMB 12m into Coo8 (for the remaining 20%). This is said to be very typical of Huang’s style since he does care about the majority control.

Coo8 has been fighting in the Chinese e-commerce battlefield for 6 years, but now as the adoptive father sees it is left behind Gome.com.cn. Data showed that it had a loss of RMB 194m in 2011, and the number was estimated to grow this year according to its expected RMB 5~6b sales during the same period.

Lu also analyzed, “The two sites are sharing the same supply chain, thus the competition is inevitable. If it still wants the twin strategy, then differentiation is needed plus blending the two in one team is also important.”

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